Posted on November 25th, 2013 No comments
More fraudulent refunds were sent to Miami than any other U.S. city — but 655 were sent to a single address in Lithuania, according to an inspector general’s report.
The Internal Revenue Service issued $4 billion in fraudulent tax refunds last year to people using stolen identities, with some of the money going to addresses in Bulgaria, Lithuania and Ireland, according to an inspector general’s report released Thursday. The IRS sent a total of 655 tax refunds to a single address in Lithuania, and 343 refunds went to a lone address in Shanghai.
In the U.S., more fraudulent returns went to Miami than any other city. Other top destinations were Chicago, Detroit, Atlanta and Houston.
The IRS has stepped up efforts to fight identity theft, but thieves are getting more aggressive, said the report by J. Russell George, Treasury’s inspector general for tax administration. Last year, the IRS stopped more than $12 billion in fraudulent refunds from going to identity thieves, compared with $8 billion the year before.
“Identity theft continues to be a serious problem with devastating consequences for taxpayers and an enormous impact on tax administration,” George said in a statement. The fraud “erodes taxpayer confidence in the federal tax system.”
Thieves often steal Social Security numbers from people who don’t have to file tax returns, including the young, the old and people who have died, the report said. In other cases, thieves use stolen Social Security numbers to file fraudulent tax returns before the legitimate taxpayer files.
The IRS, which takes pride in issuing quick refunds, often sends them out before employers are required to file forms documenting wages, the report said.
“The constantly evolving tactics used by scammers to commit identity theft continues to be one of the biggest challenges facing the IRS, and we take this issue very seriously,” the IRS said in a statement. “The IRS has a comprehensive and aggressive identity theft strategy that focuses on preventing refund fraud, investigating these crimes and assisting taxpayers victimized by it.”
Despite budget cuts, the agency said, agents have resolved more than 565,000 cases of identity theft this year, three times the number of cases resolved at the same time last year.
A separate report by George said the number of identity theft victims is on the rise as thieves get more aggressive.
Through June, the IRS identified 1.6 million victims whose identities were stolen during this year’s tax filing season, the report said. That compares with 1.2 million victims in 2012.
Many of these people didn’t realize they were victims until they submitted their returns only to learn from the IRS that someone else had already used their Social Security number to file and claim a refund.
The IRS does a good job of eventually identifying the proper owner of Social Security numbers, but the process can be lengthy, the report said. For cases closed between August 2011 and July 2012, it took an average of 312 days to resolve the case and issue a proper refund, the report said.
The IRS said it has resolved most of this year’s identity theft cases within 120 days.
Last year, the IRS issued 1.1 million refunds to people using stolen Social Security numbers, the inspector general’s report said. Those refunds totaled $3.6 billion. By comparison, the IRS issued $5.2 billion in refunds to people who stole Social Security numbers in 2011, the report said.
Additionally, the IRS issued 141,000 refunds last year to people using stolen taxpayer identification numbers, which are typically used by foreign citizens who earn money in the U.S. Those refunds totaled $385 million, the report said.
Florida is a big target of identity theft in part because of the large number of older residents living there. Older and younger people can be targets for identity theft because many don’t meet the income requirements to file a federal tax return.
Nearly 38,000 potentially fraudulent refunds, totaling $147 million, were sent to addresses in Miami, the report said.
Among individual homes, one address in Orlando received 580 tax refunds totaling $870,000, the report said. Another Orlando address received 291 refunds totaling $466,000.
Sen. Bill Nelson, D-Fla., has introduced a bill that would toughen criminal penalties for people who file fake tax returns under someone else’s name. The bill would also require the IRS to get legitimate taxpayers the refunds they’re due within 90 days.
“While these reports show that some progress is being made in reducing tax fraud, it’s also clear that there is still much to be done and there are still a number of improvements that need to be made to protect both taxpayers and the U.S. Treasury,” Nelson said.
Posted on April 15th, 2013 No comments
An epidemic of tax-related identity theft continues to plague the Internal Revenue Service despite efforts by the agency and law enforcement officials to combat the fraud, witnesses told a Senate panel Wednesday.
“We are losing $5 billion each year to this crime, and now the problem is getting worse,” said Sen. Bill Nelson, D-Fla., the chairman of the Senate Special Committee on Aging.
Criminals use stolen personal information to file fraudulent tax returns, usually in January, before the real taxpayers have a chance to file. By the time the victims send in their returns, it’s too late: The IRS already has mailed refund checks to the identity thieves. It can take months – even years – for the IRS to untangle the mess and send the taxpayers the refunds they’re owed.
Nine of the 10 U.S. cities hit hardest by the scam are in Florida. The Miami metropolitan area tops the list, with 35,914 cases of tax-related identity theft reported last year and the highest per capita rate of complaints, 645 per 100,000 residents.
Miami was followed by Atlanta, which had 12,992 complaints, Tampa, Fla., with 9,805, and Orlando, Fla., with 4,991.
Nationwide, cases of tax-related identity theft surged 650 percent from 2008 to 2012. In 2011, thieves filed 1.5 million undetected fraudulent tax returns and received $5.2 billion in refunds, according to an audit last year by the Department of the Treasury’s inspector general.
Witness Marcy Hossli, 57, of Lake Worth, Fla., has been a victim of identity theft through tax fraud three years in a row.
“I should never have to go through anything like this, nor should anyone else,” Hossli said. “I feel violated. It’s hard to concentrate in work. I am stressed constantly.”
Hossli told senators she still is waiting for her 2012 tax refund. She suffers from cancer and owes $4,000 in medical bills. “I really need the money,” she said.
Senators expressed frustration that the IRS hasn’t been able to do a better job at catching fraud even though criminals often use the same addresses to file multiple returns.
Republican Sen. Susan Collins of Maine said thieves used the same address in Lansing, Mich., to file 2,137 tax returns, and they received $3.3 million in refunds. An address in Chicago was used to steal $900,000 in refunds through almost 800 fraudulent returns, Collins said.
“Criminal gangs have figured out that it’s cheaper and easier for them to steal taxpayers’ identities and hijack their refunds than it is to traffic in drugs, rob banks or fence stolen property,” Collins said.
“The IRS has an obligation that obviously they’re not meeting,” said Sen. Claire McCaskill, D-Mo. “How in the world can there not be a system in place that the IRS could not catch that they’re sending 2,000 refunds to the same address?”
Tax refund thieves commonly target senior citizens, as well as low-income people and students, who might not be required to file returns.
The audit by the Treasury Department’s inspector general estimated that 76,000 senior citizens likely were victims of tax fraud identity theft in 2010, resulting in $374 million in fraudulent tax refunds.
Victims often have their identities stolen by corrupt employees at nursing homes and hospitals, Kathryn Keneally, assistant attorney general for the Department of Justice’s tax division, said in her testimony before the committee. In other cases, criminals take names from public death lists to file tax returns, she said.
“For the public the risk is clear,” Keneally said. Such crimes “can and do arise in any setting where the lure of fast money puts at risk personal identifying information, including at state agencies, student loan providers, the military, prisons, companies servicing Medicaid programs – the list is growing all too long.”
Postal workers have been compromised, robbed and in one case killed in order to steal refund checks, she said.
Prosecuting tax-refund identity theft is a national priority, she added.
Legislation Nelson introduced this week would increase jail time and fines for people convicted of tax-related identity theft and direct the IRS to close identity theft cases within 90 days. Last year, it took an average of 196 days for the IRS to close such cases.
The delays are unacceptable, Nelson said. He said victims of identity theft shouldn’t have to wait six months for their refunds, much less two years, as at least one woman in Parkland, Fla., had to do.
“Many Americans rely on getting those tax refunds back so they can pay their bills,” he added.
Nelson’s bill, co-sponsored by fellow Democratic Sens. Dianne Feinstein of California and Charles Schumer of New York, also would ensure that victims don’t have to explain their plight to different IRS employees every time they contact the agency. Instead, the IRS would give each victim a single point of contact to help track the case.
Other provisions include restrictions that would make it harder for thieves to load stolen refunds onto prepaid cards, language that allows identity theft victims to opt out of electronic filing and prohibitions on printing Social Security numbers on Medicare ID cards and communications.
Posted on December 17th, 2012 No comments
Two members of a local crime ring that spent more than $1 million with thousands of credit-card numbers that hackers stole from a California hotel have been sentenced to federal prison, the U.S. Attorney’s Office said Friday.
Troy Henry, 37, of Orlando was sentenced to 13.5 years in prison; and Randall Rodgers, 32, of California was sentenced to 10 years.
Since August 2011, 12 other people have been sentenced to prison by a federal judge in Orlando for their roles in the credit-card fraud and identity theft scheme.
So far, the prison sentences handed down to the co-conspirators has ranged from two years to 13.5 years.
Secret Service agents in Orlando began investigating the ring in 2010 when they were notified by a San Diego agent, who traced fraud in Central Florida to a hacked computer at a California hotel.
Investigators said someone hacked the computer servers for the Se San Diego Hotel, and stored customers’ credit card data.
Agents tracked fraudulent activity related to the cards and found a “substantial” amount of spending at Target stores in Central Florida, court records said.
Prosecutors said the Central Florida ring and Rodgers bought stolen credit card information over the Internet from someone based in Azerbaijan.
Once the crime ring had the stolen credit card numbers, they used encoding machines and computer software to re-encode gift cards at retail stores to buy merchandise.
Prosecutors said Henry and Rodgers were leaders in the group.
Their co-conspirators had specific roles in the operation, prosecutors said.
Crime ring member Nancy Major used the fake credit cards to buy merchandise at retail stores in Central Florida. She was sentenced previously to five years in prison.
Posted on November 26th, 2012 No comments
The investigation began in March with the discovery that 49 Aventura police officers and six other people connected to the city government were victims of identity theft and tax fraud in the 2011 income tax season, authorities said.
On Tuesday, the inquiry led to six South Florida residents being indicted on charges they operated a major identity theft ring out of a Pompano Beach home on the 1200 block of Northeast Fifth Street.
The four men and two women are accused of using the money to do everything from make child support payments online to take vacations in Orlando and rent BMWs at Fort Lauderdale, West Palm Beach and Miami airports.
Brothers Jeffery McCarthy and Christopher McCarthy, their girlfriends Marysol Hernandez and Teresa Calderon, cousin Floyd Harper, and friend Brian Gamble, all in their 20s and 30s, face multiple counts of fraud and identity theft in federal court. They all deny the allegations.
The fraud involved filing unauthorized income tax returns on behalf of victims and opening lines of credit, investigators said.
According to court records filed by detectives, the Aventura Police Department discovered earlier this year that 49 police officers, a civilian employee of the department, a retiree, three other city workers and a spouse had all been victimized by tax fraud and identity theft in the prior year.
Detectives wrote in court records that they uncovered a link to the Pompano Beach home the McCarthy brothers shared and found that the Internet service at that address had been used to file about 432 tax returns in a two-week period in January.
Investigators also found that USAA Federal Savings Bank employees were conducting a separate fraud investigation regarding the same residence related to about $2 million in lines of credit opened using victims’ names and variations of the same Pompano Beach address. The six were arrested last month.
Posted on August 30th, 2012 No comments
A small South Florida city has attracted the attention of federal investigators looking into tax refund fraud and identity theft, according to an independent watchdog agency that oversees the Internal Revenue Service.
In Belle Glade, nestled along Lake Okeechobee, 741 tax returns worth more than $1 million in refunds were filed from a single address last year, according to the Treasury Inspector General for Tax Administration.
The Belle Glade address ranked third nationally for number of returns filed. Investigators would not release the address, citing confidentiality rules on tax returns. But House Oversight Subcommittee Chairman Charles Boustany Jr., R-La., referred to it as a home.
Three of the top five addresses used to file potentially fraudulent returns were in Florida, the Inspector General reported.
Tampa and Miami were mentioned as the top cities where potentially fraudulent 2010 tax returns were filed last year.
Nationally, thieves are suspected of using the identities of 2,274 children, 105,000 dead people and almost 1 million people who don’t normally file returns to collect $5.2 billion in refunds.
The Inspector General’s analysis found that incidents of identity theft jumped 155 percent last year.
“The report really underscores just how bad a problem ID tax fraud is in Florida and around the country,” said U.S. Sen. Bill Nelson, who asked the Treasury Inspector General last year to investigate the extent of the problem. “It’s become an epidemic that’s costing law-abiding U.S. taxpayers billions of dollars. And it’s one we’ve got to fix. That’s why I’ve filed legislation aimed at putting a stop to these fraudsters.”
The IRS disputed some of the watchdog’s findings, including estimates of $21 billion in potentially fraudulent tax returns in the next five years.
Plantation IRS spokesman Mike Dobzinski said Monday that his agency “along with the Department of Justice, has significantly stepped up its activities to pursue those who attempt to steal identities to commit tax fraud.” That will help cut down on future abuse, he said.
But Rep. Boustany was concerned that the IRS wasn’t spotting suspicious multiple filings at one address.
In addition to the Belle Glade home, an Orlando post office box allegedly received $1,088,691 for 703 suspected fraudulent tax returns filed, he said. A home in Tampa netted even steeper refunds: It allegedly sent out 518 potentially fraudulent fake returns but collected nearly $1.8 million from Uncle Sam, Boustany said.
David Barnes, public affairs liaison of the Treasury Inspector General for Tax Administration, said his agency “did not analyze the fraud by geographic or metropolitan location.” So he said he couldn’t comment on why the state — and South Florida in particular — leads the nation in identity theft.
His agency’s report showed, for example, that Miami thieves allegedly submitted nearly 75,000 bogus tax returns last year and received nearly $281 million in refunds.
It is “one of the biggest constituent problems we see in our office,” said alex Conant, a spokesman for U.S. Sen. Marco Rubio. The tax fraud “often prevents law-abiding taxpayers from receiving the tax refunds they deserve.”
“Over the past several years my office has seen a dramatic increase in the number of individuals needing assistance because of tax refund identity theft, a clear indication this crime is becoming a big problem in South Florida,” added U.S. Rep. Debbie Wasserman Schultz, of Weston. That’s why she said she introduced a bill to help stop this problem and protect Americans.
Florida IRS spokesman Dobzinski said his agency is working hard to stop the fraud. This January, the IRS and Justice Department worked together to press 923 charges against 105 people in 23 states.
“To support our prevention efforts, we enhanced our return processing filters to improve our ability to identify false returns and stop fraudulent refunds from being issued,” he added.
The IRS also established a specialized unit that analyzes and develops leads on identity theft, Dobzinski said.
But others are skeptical with several South Florida tax preparers saying tax-related identity theft is up even more this year than last.
“We need to know why the IRS is not catching this fraud,” Rep. Boustany said.
Posted on October 1st, 2010 No comments
For the most part, electronic health records are terrific. But they're far from perfect
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Top 10 'urban myths' of EHRs
Posted on October 14th, 2009 No comments
Conference to be held Oct.
Posted on October 14th, 2009 No comments
Company provides secure archiving and compliant data protection and retention solutions.
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KOM Marks 40th Anniversary
Identity Theft, Data Breaches and Non-Compliance with Government Regulations is a Growing Epidemic in HealthcarePosted on September 9th, 2009 No comments
I am traveling to the InSight 2009 Annual Conference in Orlando this week to meet with scores of healthcare organizations struggling in the face of a growing epidemic of issues related to medical identity theft. In preparation, I have given a great deal of thought to what hospitals can and must do to protect themselves and their patients